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Over the last 40 years Technology investors have learned that the success of startups are not just about the technology but “it’s about the team.”

We spent a year screwing it up in our Lean LaunchPad classes until we figured out it was about having the right team.

Startup Team Lessons LearnedDuring the last 12 months we’ve taught 42 entrepreneurial teams with 147 students at Stanford, Berkeley, Columbia and the National Science Foundation. (As many teams as most startup incubators.)

Get into the ClassWhen I first started teaching hands-on, project/team entrepreneurship classes we’d take anyone who would apply. After awhile it became clear that by not providing an interview process we were doing these students a disservice. A good number of them just wanted an overview of what a startup was like – an entrepreneurial appreciation class (and we offer some great ones.) But some of our students hadn’t yet developed a passion for entrepreneurship and had no burning idea that they wanted to bring to market. Yet in class they’d be thrown into a “made-up in the first week” startup team and got dragged along as a spear-carrier for someone else’s vision.

Step One – Set a BarSo as a first step we made students formally apply and interview for the Lean LaunchPad class. We were looking for entrepreneurs who had great ideas and interest in making those ideas really happen. We’d hold mixers before the first class and the students would form their teams during week one of the class.

But we found we were wasting a week or more as the teams formed and their ideas gelled.

Step Two – Apply As A TeamSo next time we taught, we had the students apply to the class as a team. We hold information sessions a month or more before the classes. Here students with preformed teams could come and have an interview with the teaching team and get admitted. Or those looking to find other students to join their team could mix and market their ideas or join others and then interview for a spot. This process moved the team logistics out of class time and provided us with more time for teaching.

But we had been selecting teams for admission on the basis of whether they had the best ideas. We should have known better. In the classroom, as in startups, the best ideas in the hands of a B team is worse than a B idea in the hands of a world class team.

Here’s why.

Step Three – Hacker/Hardware, Hustler, Designer, VisionaryAs we taught our Lean LaunchPad classes we painfully relearned the lesson that team composition mattersas much or more than the product idea. And that teams matter as much in entrepreneurial classes as they do in startups.

In a perfect world you build your vision and your customers would run to buy your first product exactly as you spec’d and built it. We now know that this ‘build it and they will come” is a prayer rather than a business strategy. In reality, a startup is a temporary organization designed to search for a repeatable and scalable business model. This means the brilliant idea you started with will change as you iterate and pivot your business model until you find product/market fit.

The above paragraph is worth reading a few times.

It basically says that a startup team needs to be capable of making sudden and rapid shifts – because it will be wrong a lot. Startups are inherently chaos. Conditions on the ground will change so rapidly that the original well-thought-out business plan becomes irrelevant.

And finding product/market fit in that chaos requires a team with a combination of skills.

What skills? Well it depends on the industry you’re in, but generallygreat technology skills (hacking/hardware/science) great hustling skills (to search for the business model, customers and market,) great user facing design (if you’re a web/mobile app,) and by having long term vision and product sense. Most people are good at one or maybe two of these, but it’s extremely rare to find someone who can wear all the hats.

It’s this combination of skills is why most startups are founded by a team, not just one person.

University SilosWhile building these teams are hard in the real world, imagine how hard it is in a university with classes organized as silos. Business School classes were only open to business school students, Engineering School classes were only open to engineering school students, etc. No classes could be cross-listed. This meant that you couldn’t offer students an accurate simulation of what a startup team would look like. (In our business school classes we had students with great ideas but lacking the technical skills to implement it. And some of our engineering teams could have benefited from a role-model to follow as a hustler.)

So the next time we taught, we managed to ensure that the class was cross-listed and that the student teams had to have a mix of both business and engineering backgrounds.

I think we’ve finally got the team composition right – relearning all the lessons investors already knew.

But now on to the next goal – getting our mentor program correct.

Lessons Learned

Finding product/market fit in startup chaos requires a team with a combination of skills

38 Responses

I really like this post, there are few creative tools in this area to support team dynamics and feedback loops – I wish there was a startup version of http://www.sonar6.com/ that sat at the hub of team cross over & complexity for the VC.

Great insights as usual. I found it interesting to hear how your university program is evolving in similar fashion as a company.

Something else to consider – In addition to pairing engineering and business individuals, I have found adding a creative, right-brained individual to be a powerful addition to a business/engineering team. Their creative insights usually emerge at critical times and help get the team unstuck as well as add a really different perspective.

‘In the classroom, as in startups, the best ideas in the hands of a B team is worse than a B idea in the hands of a world class team.’

reminded me of an approach embraced at Pixar:

“Great teams can start with a mediocre idea and deliver something great. “If you give a good idea to a mediocre team they will screw it up. If you give a mediocre idea to a great team they will either fix it or throw it away and come up with something that works.” – Ed Catmull. “How Pixar Fosters Collective Creativity”, Harvard Business Review, Vol. 86. #9. September 2008.

After such a realization, the next question may be ‘How do we obtain a great team?’

Crafting a team formation process that ensures domain diversity into a team may set the initial conditions for success. This provides a context to maximize functional complementaries.

After that, how does one continue to shape success? How does one mentor another to be a great team asset?

I am anxious to observe the approaches you will take during class and with assignments and with your mentors program.

Steve, how do you create and “A team”? I have been on teams that start strong and fall apart. Personalities that start off working well together, clash and the entire project fails. Any tips on building a team? -Joe

Sorry, re-reading my comment and realized it may have come accross as a bit of smartass, not my intention 🙂 My significant other is the founder of a YC startup and I lived first-hand the whole experience. A lot of the energy in the YC selection process is focused precisely in identifying what kind of founding teams are most likely to “make it” and a lot of that resonated with the article. You are probably familiar with this essay by PG, but just in case some of your readers are not, here it goes:

How do you get the business students and engineering students to mix long before you accept the applications? It seems that the longer the relationship the less likely the team will blow up under pressure.

Joe,
Yes, to generalize hackers tend to underestimate the importance of the hustler. Hustlers appear non-technical, non-value add – as if great hacking skills is the entire skills needed added by the team on day one. At times great hackers have become great hustlers. Bob Noyce of Intel is the canonical model for Silicon Valley. Mark Andreessen is the other model. Larry Page is attempting to be the modern Noyce.

Forming a great team is essential in today’s complex environment in order to effectively deal with all the internal and external forces that will quickly takes their toll on the unprepared. Finding effective solutions to internal communication and personality issues is just as important as validating and verifying your customers needs. Take your time in assemling your team and check several layers of references. Meet them in business and social situations and get to know who you are getting married to.

Steve, great seeing you in Las Vegas. Totally get the university silo problem having dealt with dozens of institutions in Upstate New York. We too found that getting courses cross-listed (usually requires President or Provost putting their foot down) and then letting the students recruit their teammates is the way to go.

I’ve been working on a business accelerator that does something very similar – that is, we put ‘team’ at the beginning of the startup process using the eTeamTool.

As you’ve previously described, we’ve all moved from a linear process of developing the idea and then moving onto the market; with an iterative process between the two.

What we’re now doing – and you are describing here – is where you iterate around the team too – at the same time as iterating on the product and the customer/ market.

Yes, it is the perfectly chaotic storm – but it actually works!

The point you make about pivots is key here – and why we can’t use traditional recruitment methodologies in building a startup – because the skills you need will change radically as your business pivots – *but* – the entrepreneurial attributes in your core team remain the same.

Hence, entrepreneurial teams are different from ‘highly skilled’ technical teams.

I’d be happy to share more insights on our eTeamTool and business accelerator if you felt that would be appropriate.

To follow up on Nasir’s post, we have been trying to address the same problems at Syracuse University for a few years now. The good news is that 300+ students later we have come to similar conclusions …(No bad news other than the reality that typical institutional barriers abound.).

We further concluded that one semester wasn’t enough (time is a practical issue) … so we split it into three: What’s the Big Idea?, Idea2Startup and the Sandbox (our off-campus accelerator). Mentors and coaches are involved throughout the process (via both local and alumni channels). It is campus wide. At the start, we went through the mayhem of cross listing. Ug. It is now a campus-wide minor (Information Tech, Design & Startups). Graduate students mix with the undergraduates. In short, all start-up minded are welcome. There are no “prerequisites” for any “piece” of it, but the bar is higher at each step and a can-do team is required for Idea2Startup.

The goal is to help build a startup minded community both on and off campuses across Upstate New York … while recognizing that the university is better suited as a “feeder” and that the effort must ultimately be lead by entrepreneurs to have any chance of long-term success (re:Brad Feld).

How did we make it happen on campus? Recognizing agendas and pressuring admin from the bottom (students) and the top (alumni).

The learning continues and we remain vigilant of your efforts as we try to expand across institutions. Thanks for sharing!

Some of our effort is summarized across the following links if interested:

“We lived this and reached the success in KiBMK through 1982 – 1994. We were a few, started with an idea, recruited the personnel for several layers of a new organization; we cared to select very carefully, from naturally teamable sources, and treated the whole as a team, we educated and trained, cultured them, then we became a team, we created new subteams working on the start up idea and the products like IPTs (but we didn’t know the names or concepts like IPT or TQM etc., we didn’t name or even we didn’t write down much, because we all understood the aims and we were working on them in an organized way after 4 years pof reparation..), we redefined the idea and the ways to go, and worked as sub, sub sub teams especially last 8 years (as the big team), during this time we lost a few person, terminated one personnel’s contract and relocated/replaced/renewed couple of them, in accordance with the team’s idea. At the end, we made an organization for success; today it is still alive, still produces new products, maybe the performance needs to be re evaluated . And I’m proud of being a member of that team. My warm greetings to all of that team’s members, from CEO to caretakers. And I believe, it will exist till the yeast or soul (whatever you call it) is alive in that team, or with another words till it is a live team.” This was told to me by a friend of mine, and I Know him, and the story is true.
In my opinion, organizations are like human beings, they need to be taken cared well, educated, trained, protected, they should be treated like a human, to be kept as an healty human.. complete and prepared with all organs in the body and brain.. But don’t forget organizations are also open to diseases.. I also know several organizations lived like several human beings.., some of them are like this and some are different sories.. Sorry for the language mistakes.
Thank you for bringing such a nice point into the focus of new organization makers and managers, and members of teams who want to know where are they, and where are they going.

I really enjoy your blog. Any suggestions for folks trying to identify potential team members? I come from the business side with (I think) a strong business idea but have no idea how find the engineers. Local networking groups? Online?

I just saw your replay to Steve. We have a new beta site up in just the last few days with Launch America at StartupTeamup.com for entrepreneurs with an idea to connect with others and get the expertise they need, help forming teams and then getting funding. Sign up and post the expertise you are looking for, the site will search for you and help find the people and skill sets you are looking for. Hope this helps.
Nick Bassill
LaunchAmerica.org

Steve,
What about having someone (I would posit an outside consultant) who is adept at finding the (if it exists) scalable first customer business model as you so wonderfully articulate in your Customer Development Manifesto: the Path of Warroirs and Winners?

My belief and is tha most “young” startup teams don’t have the outside savvy and/or (skill set in creating that old school “rolodex”) requisite temprament (read old age and a certain nuanced maturity) to ask questions what will lead to neccessary iteration and being able to take negative feedback which is actually crucial (in my experience in sales and business development oneillprod.com) in helping find out if INDEED there is a market out there willing to purchase this new and wonderful technology, idea & services etc.

By the way….You have helped launch me as a going concern from a Fast Company article you wrote a year back. Job Titles That Can Sink Your Startup. I cite this article as to whay you should hire me Mr. or Mrs. (we is my revenue and our expert VP of Sales is struggling etc)

I would be very grateful if you were willing to read a blog post of mine that I’ve been using as my raison de etre for my practice and wanting to work with startup comanies as a crucial outside resource.

The challenge I’m finding is getting the younger and managment team (and somtimes older VC and Angel backers) that using someone like me at the start is a good use of funds and by doing what I do, not only will I validate the business model (or not) I end up hading them the first few top new customers!!

I would be grateful for any feedback Steve and thanks for all of your insight! I am not alone when I read what you teach, live and offer as counsel for as a sole professional…it can sometimes be quite lonely!

I was at Zilog from 1976 to 1980, Commercial Sales Manager. Went on to do a series of high tech start-ups in the Valley, LAN, CAE, Software, etc. Sounds like we were in parallel universes, and yes I did a presentation at the Home Brew several times, and I did hang out at the Good Earth, yeah I am old but not done.

I am in the process of doing a documentary about the “Start-Up” and where that process is today, what makes people tick who do Start-Ups , the emotional ups and downs, etc.

[…] is evolving as fast as the teams are learning. As a teaching team we’ve learned a ton of how to best select teams, so we now insist that they come in as preformed teams. We hold mixers a month or two in advance to […]